Corporate Governance and Financial Crisis
The ongoing financial crisis has proved that Corporate America and the Corporates in other countries around the world have exhibited behavior that can be described as mismanagement and not keeping in tenets of good corporate governance. In this respect, some of the criticism that has been directed at corporate leaders and the bankers in particular…
Corporate Governance and Expectations from the Management
The field of corporate governance exists in a symbiotic relationship between the management and the board of directors. It is impossible to talk about corporate governance without taking into account the roles and duties of the board of directors and the expectations from the management. To explain this fully, it would be useful to consider…
Corporate Governance in the West and the Rest of the World
The previous articles discussed how good corporate governance is imperative to the existence of a structured and functioning economy. In this article, we look at the ways in corporate governance is practiced in the developed economies of the West and in the developing economies in the rest of the world. To start with, the ongoing…
The often discussed and much criticized role of the government in regulating the corporate has gained all the more importance in these changing economic times. It’s time that the governments took more active role in regularizing the corporate through necessary means as we have learnt the painful way that the corporate crimes or the white collar crimes as they are called not at all victimless. So, if an old employee losses all his pension and savings on account of a corporate fraud committed by his organizations, the ramifications are long term. The mere wrist slapping exercise and sometimes even bail out that the government finances for erring corporate, surely does not act as a deterrent for others.
The very complex nature of the government and corporate can be clearly studied in the ongoing crisis in the European Union where the question of whether to use tax payers money to bail out Greece’s economy has become a political decisions rather than a business one. So what is the alternate path? Allowing self regulation by organization means making fox the shepherd, while on the other hand, going by the rule book approach of the US government has also been under much criticism, more so after the current financial crisis begun.
The other aspect of the scenario is the fact that fines are considered to be a part of doing business by the corporate, and the civic penalties that are occasionally levied against them is hardly enough to set example. The criminal sanctions against corporate are not a common phenomenon and the experts believe that can be more potent in deterring corporate misconduct. However, the other side of the coin is the fact that most of the regulating authorities like SEC etc have no authorities to impose criminal sanctions against corporate. Also, the penalties and fines bring no respite to the employees, shareholders and communities. [Recall the Bhopal Gas Tragedy]. Reasonably evaluated criminal and civic sanctions in a mix as appropriate can help address the issue.
The choice of going after the corporation or people, who have been involved in the misconduct, is another important consideration. A rather fair and objective view of this issue is that if the organization has a proper system of safeguards and checks in systems and processes and if the misconduct profits just one person, in this case even the corporate becomes a victim. For such situations a single person can be accused of embezzlement and liable for prosecution however if the fraud is at a larger level involving more people, the situation becomes complex, whether to hold liable the board members and senior leaders for failing to ensure the prevention.
The recent legislative development has come up with a guideline for the corporate:
The government should also ensure that there are not too many agencies to act as enforcement authorities as this may lead to conflict of interests.
Article Written by
Himanshu Juneja, the founder of Management Study Guide (MSG), is a commerce graduate from Delhi University and an MBA holder from the esteemed Institute of Management Technology (IMT). He has always been someone deeply rooted in academic excellence and driven by a relentless desire to create value. Recently, he was honored with the “Most Aspiring Entrepreneur and Management Coach of 2025 (Blindwink Awards 2025)” award, a testament to his hard work, vision, and the value MSG continues to deliver to the global community.
Article Written by
Himanshu Juneja, the founder of Management Study Guide (MSG), is a commerce graduate from Delhi University and an MBA holder from the esteemed Institute of Management Technology (IMT). He has always been someone deeply rooted in academic excellence and driven by a relentless desire to create value. Recently, he was honored with the “Most Aspiring Entrepreneur and Management Coach of 2025 (Blindwink Awards 2025)” award, a testament to his hard work, vision, and the value MSG continues to deliver to the global community.
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